US markets closed at record highs as easing US-Iran tensions, falling oil prices, and strong AI-driven Earnings from Dell Technologies (NYSE: DELL) boosted investor sentiment despite persistent Inflation and slowing GDP growth.

Key Highlights

  • S&P 500 and Nasdaq closed at fresh record highs amid reports of a possible US-Iran ceasefire extension.
  • Oil prices plunged nearly 20% as fears of Strait of Hormuz Supply disruptions eased.
  • Dell Technologies (NYSE: DELL) surged after a major earnings beat driven by AI server Demand.
  • Micron Technology (NASDAQ: MU) and Okta (NASDAQ: OKTA) gained on continued AI-related optimism.
  • Gap (NYSE: GAP) and American Eagle Outfitters (NYSE: AEO) shares fell sharply after weak guidance.
  • Core PCE inflation rose 3.3% year-over-year, while Q1 GDP growth was revised lower to 1.6%.
  • Goldman Sachs (NYSE: GS) raised its year-end S&P 500 target on stronger earnings expectations.

US equities climbed to fresh record highs on Thursday as easing tensions in the Middle East and renewed enthusiasm surrounding artificial intelligence spending strengthened investor appetite for risk assets, offsetting lingering concerns over inflation and slowing economic growth.

The S&P 500 and Nasdaq Composite both closed at all-time highs after reports suggested that Washington and Tehran were discussing a 60-day extension of the current ceasefire arrangement, alongside negotiations aimed at reopening the Strait of Hormuz and reviving nuclear talks. The developments helped calm fears of a broader regional conflict that could threaten global oil supplies and reignite energy-driven inflation pressures.

Crude prices fell sharply as traders unwound geopolitical risk premiums built into energy markets over recent weeks. Brent and WTI crude both posted steep declines amid expectations that the reopening of key shipping routes would reduce the likelihood of supply disruptions. Lower oil prices also improved sentiment across broader Equity markets by easing concerns over inflation and consumer costs.

The market rally was further fuelled by another wave of strong earnings linked to the artificial intelligence Investment cycle. Dell Technologies (NYSE: DELL) emerged as one of the session’s strongest performers after reporting quarterly Revenue well above analyst expectations, driven by surging demand for AI servers and enterprise infrastructure. The company also raised its full-year guidance, reinforcing investor confidence that corporate spending on AI-related technologies remains resilient despite broader economic uncertainty.

The positive momentum extended across semiconductor and software stocks. Micron Technology (NASDAQ: MU) continued its advance amid expectations of sustained memory-chip demand tied to AI computing, while Okta (NASDAQ: OKTA) gained after highlighting growing opportunities linked to AI-driven enterprise applications.

The technology-led rally contrasted sharply with weakness in parts of the retail sector, where earnings reports painted a more cautious picture of consumer demand. Gap (NYSE: GAP) and American Eagle Outfitters (NYSE: AEO) both suffered double-digit declines after issuing weaker guidance and warning about Tariff pressures and softer discretionary spending. The divergence underscored the increasingly uneven nature of the US economy, with Capital Expenditure linked to artificial intelligence remaining robust even as traditional consumer-facing sectors show signs of strain.

Recent economic data added to the complex backdrop confronting investors and policymakers. The Federal Reserve’s preferred inflation measure, core personal consumption expenditures, rose 3.3 per cent year-on-year in April, marking its highest reading since late 2023. Consumer spending also remained firm, suggesting that underlying demand in the economy continues to hold up despite elevated borrowing costs.

At the same time, first-quarter US GDP growth was revised lower to an annualised 1.6 per cent from a previous estimate of 2 per cent, reflecting weaker household spending and slower economic momentum. The combination of sticky inflation and moderating growth has revived concerns that the US economy could face a prolonged period of stagflationary pressure, complicating the Federal Reserve’s path toward eventual interest-rate cuts.

Despite those concerns, investors have largely remained focused on strong corporate earnings and the continuing expansion of AI-related investment themes. Goldman Sachs (NYSE: GS) this week raised its year-end target for the S&P 500, citing stronger profit expectations and sustained technology spending as key drivers of equity market strength.

Elsewhere, Best Buy Co. Inc. (NYSE: BBY) and Dollar Tree Inc. (NASDAQ: DLTR) moved higher following better-than-expected earnings reactions, while renewed excitement surrounding a potential SpaceX IPO boosted sentiment across speculative growth and space-technology stocks. Investor enthusiasm also extended into emerging technology themes following increased attention on Quantum Computing company Quantinuum.

Wall Street futures traded broadly steady ahead of the next round of labour market data, which investors increasingly view as the next major catalyst for financial markets. A softer employment report could strengthen expectations for monetary easing later this year, while continued labour-market resilience may reinforce concerns that inflation will remain elevated for longer.

For now, however, markets appear willing to look past macroeconomic uncertainty as geopolitical risks ease and the AI investment boom continues to dominate investor sentiment.